Correlation Between MI Technovation and Sunzen Biotech

Can any of the company-specific risk be diversified away by investing in both MI Technovation and Sunzen Biotech at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MI Technovation and Sunzen Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MI Technovation Bhd and Sunzen Biotech Bhd, you can compare the effects of market volatilities on MI Technovation and Sunzen Biotech and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MI Technovation with a short position of Sunzen Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of MI Technovation and Sunzen Biotech.

Diversification Opportunities for MI Technovation and Sunzen Biotech

-0.41

Correlation Coefficient

MI Technovation  Sunzen Biotech

Very good diversification

The 3 months correlation between 5286 and Sunzen is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding MI Technovation Bhd and Sunzen Biotech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunzen Biotech Bhd and MI Technovation is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MI Technovation Bhd are associated (or correlated) with Sunzen Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunzen Biotech Bhd has no effect on the direction of MI Technovation i.e., MI Technovation and Sunzen Biotech go up and down completely randomly.

Pair Corralation between MI Technovation and Sunzen Biotech

Assuming the 90 days trading horizon MI Technovation Bhd is expected to generate 1.95 times more return on investment than Sunzen Biotech. However, MI Technovation is 1.95 times more volatile than Sunzen Biotech Bhd. It trades about 0.05 of its potential returns per unit of risk. Sunzen Biotech Bhd is currently generating about 0.01 per unit of risk. If you would invest  198.00  in MI Technovation Bhd on September 3, 2024 and sell it today you would earn a total of  12.00  from holding MI Technovation Bhd or generate 6.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

MI Technovation Bhd  vs.  Sunzen Biotech Bhd

MI Technovation Bhd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MI Technovation Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MI Technovation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sunzen Biotech Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunzen Biotech Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Sunzen Biotech is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MI Technovation and Sunzen Biotech

The main advantage of trading using opposite MI Technovation and Sunzen Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MI Technovation position performs unexpectedly, Sunzen Biotech can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sunzen Biotech will offset losses from the drop in Sunzen Biotech's long position.

The idea behind MI Technovation Bhd and Sunzen Biotech Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.